Changes from report parliamentary committee draft to plenary report

Questionnaire to the candidate for the position of

Vice-President of the European Central Bank

A. Personal and professional background

1. Please highlight the main aspects of your professional skills in monetary, economic and financial matters and the main aspects of your European and international experience.

Throughout my career – and I have been a career central banker – I have worked at the intersection of economic analysis, monetary policymaking, financial stability and European policymaking. This has given me a broad and practical understanding of monetary policy, macroeconomic developments, and the institutional dynamics of the European Union. I have had the privilege of working in environments where economic judgement must be combined with political awareness, analytical rigour and clear communication – skills that I consider essential for contributing effectively to the work of the ECB.

My professional path has consistently centred on economic and financial policy, since I joined the Croatian National Bank (Hrvatska narodna banka, HNB) in 1996 as Director of the Research Department. During my Deputy Governor tenures (2000-2012), together with my colleagues I pioneered macroprudential tools and worked decisively on the consolidation of the banking system in Croatia, which helped Croatia to weather the Global Financial Crisis with no need for bank recapitalisations (i.e. zero cost for the budget and taxpayers). In parallel, I played one of the pivotal roles during Croatia's accession to the EU, as Deputy chief negotiator. After I was appointed to the position of Governor in 2012 (now I serve my third term), Croatia successfully joined the Banking Union and the euro area. I have also been actively advocating and promoting cross-border banking cooperation, including cooperation of regional supervisors and international counterparts under the Vienna Initiative 2.0, which I have chaired since 2016. These roles required a strong grasp of macro-financial linkages, the interaction between markets and institutions, and practical challenges of designing effective policy frameworks.

Against this background, I have gained significant international and European experience. I have represented my institution in dialogues with EU institutions, Member States and international partners, and have worked in settings where aligning national perspectives with European priorities is essential. These experiences have given me a deep appreciation for the complexity of consensusbuilding in the EU, and for the importance of institutions like the ECB in maintaining stability, predictability and trust across the Union.

Across all these roles, I have learned that effective policymaking requires not only strong analytical foundations, but also the ability to listen, to explain complex issues clearly, and to build bridges across different viewpoints. These are qualities that I would bring to the ECB, together with a strong commitment to Europe and to the principles that underpin our monetary union.

2. Do you have any business or financial holdings or any other commitments which might conflict you with your prospective duties, and are there any other relevant personal or other factors that need to be taken account of by the Parliament when considering your nomination?

No.

3. What would be the guiding objectives you will pursue during the mandate at the European Central Bank (ECB)?

If entrusted with a mandate at the ECB, my guiding objective would be to contribute to a monetary policy that serves all citizens of the euro area. This means keeping a clear and unwavering focus on price stability – our primary objective – and safeguarding financial stability, which is essential for the effective transmission of monetary policy and for the resilience of our economies.

My professional background has shaped this conviction. I have served as the Croatian National Bank's Governor or Deputy Governor continuously since July 2000. During this long period of time, Croatia has been confronted with several major shocks and crises that threatened to destabilise our economy and the financial system. Despite the small size and the inherent vulnerability of the Croatian economy, we managed to weather all these shocks on our own, without relying on external financial support. Having a clear focus on the central bank's objectives and acting promptly with available instruments when those objectives are in danger have been key to our success in that regard. These lessons are directly applicable at the euroarea level: even in a much larger and more complex monetary union, clarity of purpose remains the cornerstone of effective central banking.

The ECB has demonstrated this repeatedly since its creation. It has built a sound reputation as a powerful crisis manager, having played a key role in tackling major crises, most notably the euro area sovereign debt crisis and the pandemic crisis. More recently, it delivered on its primary objective when it successfully curbed high inflation by shifting to tight monetary policy. As the ECB's Vice-President, I will work closely with my colleagues in the Governing Council and the Executive Board to continue the ECB's successful track record. In this role, I would place great importance on safeguarding the ECB’s independence while fully honouring its accountability to the European Parliament.

Provided that our main objective is met, we should support wider policies that seek to enhance the EU's competitiveness and resilience. In particular, the current efforts to create the savings and investments union are highly appropriate, as their main goal is to significantly improve the availability of financing for innovative companies, an area in which the EU lags significantly behind its main global competitors. These efforts would also contribute to a smoother transmission of monetary policy in the euro area. From the perspective of the ECB, completing the banking union is equally important as it would further reduce the risk of negative feedback loops between banks and sovereigns which, as we have seen in the past, can seriously undermine the stability of the economic and monetary union. Moreover, the ECB will continue its efforts to build the resilience of the financial system against the effects of climate change. In the last two years, the ECB has made significant progress in this regard, as climate and nature-related risks have become embedded in regular activities in the ECB's three main areas of competence, namely monetary policy, financial stability and banking supervision. Finally, the ECB will directly contribute to the ongoing efforts to enhance Europe's resilience and strategic autonomy by developing the digital euro, which will be a major alternative to the foreign payment service providers that currently dominate the market.

However, we should be careful that initiatives to improve EU competitiveness do not come at the expense of financial stability. Specifically, a relaxation of prudential regulations would likely not lead to boosting banks' lending. The euro area bank lending survey shows that capital constraints are not a relevant factor for tightening bank lending in recent years, given that banks are well-capitalised. By contrast, banks’ risk tolerance, risk perceptions and competition were important determinants. Therefore, reducing capital requirements would just lead to higher leverage and less resilience, which is not justified if we want sound financial institutions that are able to fund the economy while remaining resilient to shocks.

4. You would be the first Central and Eastern European member of the ECB’s Executive Board. How do you assess this development, and what new perspectives or approaches do you believe this background may bring to the Board’s work?

I consider it important that the ECB’s Executive Board reflects the diversity of the Eurosystem - its competences, experiences, skills, geographical balance and gender. This diversity enriches the Board’s deliberations and strengthens the ECB’s legitimacy in the eyes of all Europeans.

Over the past two decades we have witnessed the expansion of the euro area towards the countries of the Central and Eastern Europe (CEE) (Slovenia 2007, Slovakia 2009, Estonia 2011, Latvia 2014, Lithuania 2015, Croatia 2023 and Bulgaria 2026), which now account for about 6.7% of euro area population and 3.6% of euro area GDP. Thus, I would say that it comes as no surprise that there is a political will to have someone from the smaller countries of the CEE region (that joined the euro area after 1999) on the Executive Board. I believe that the choice of a member from a smaller country from the CEE region amplifies the importance of having on board views and perspectives from a standpoint of a small open economy. CEE countries are sometimes seen as being on the periphery of European decision-making processes, with their interests sometimes not as fully represented in EU institutions. Having a member from CEE would likely help bridge this gap, building greater trust in the ECB’s policies within these countries. It could also help reinforce the credibility of the ECB in regions that might feel like their concerns are overlooked in broader euro area decisions.

As you are all aware, CEE region has its own unique economic context compared to Western Europe. For decades, many CEE countries have been undergoing transitions from centrally planned economies to market economies. The region has seen rapid growth in recent years, but still faces challenges like income disparities, varying levels of economic development, and distinct monetary and fiscal needs. Bringing a CEE perspective to the ECB would introduce a more nuanced understanding of economic growth dynamics in emerging economies.

In addition, having long worked in a “hostcountry” supervisory environment – a reality shared by many smaller euro area members – I would bring a practical understanding of how financial stability risks can build up in small, bankdominated systems, and how close cooperation between national and European authorities can mitigate them. This approach complements the perspectives of colleagues coming from larger, more marketbased financial systems.

More broadly, I am convinced that the presence of a Board member with long experience in Central and Eastern Europe can help strengthen trust in the ECB’s policies across the whole Union and demonstrate that all Member States – large or small, early or later joiners – are fully part of the euro area’s decisionmaking. It also sends a positive signal to countries on the path toward euro adoption that their perspectives are understood and taken seriously.

At the same time, I would not see myself as representing any specific region. Executive Board members must act in the interest of the euro area as a whole. My aim would be to contribute constructively to the Board’s collective work by bringing analytical rigour, openness to different viewpoints and a deep commitment to Europe’s shared institutions and values.

All in all, I think the addition of an Executive Board member from a CEE country could enrich the ECB’s work by providing a broader, more inclusive perspective on economic policy and regional challenges. This could lead to better-targeted policies that foster overall European stability and growth, while also considering the particularities of the diverse economies within the euro area.

B. ECB monetary policy and economic developments

5. The ECB has reaffirmed a symmetric definition of price stability over the medium-term. How should this commitment be implemented and assessed in practice when inflation deviates persistently from the medium-term target? What is your definition of the ‘medium-term’?

It is important to recognize that defining "price stability" is a core responsibility of the ECB. The 2003 ECB strategy review defined the inflation target as "below, but close to 2%" – a refinement of the original 1998 target of "below 2%". The subsequent strategy review, in 2021, was motivated by the persistent low-inflation environment and prompted another reformulation of the definition. Recognizing that the formulation "below, but close to 2%" might suggest that 2% is a ceiling and thereby risking de-anchoring of long-term inflation expectations downwards, the ECB redefined its price stability objective as a symmetric 2% inflation target over the medium term.

This new formulation is simple and easily communicated – the symmetry of the target conveys that negative and positive deviations from the target are equally undesirable. The most recent strategy assessment in 2025 confirmed this symmetric target while acknowledging an increasingly volatile environment ahead.

Any large and sustained deviation of inflation from the target in either direction must be addressed forcefully to prevent such deviations from becoming entrenched through de-anchored inflation expectations. Elevated inflation expectations in an inflationary environment act pro-cyclically creating additional inflationary pressures – lower real rates incentivize households to increase spending (decrease savings) and firms to invest more, workers to demand higher wages and, generally, firms to raise their prices. Consequently, a strong and front-loaded initial policy response and appropriate fine tuning after that is essential to prevent de-anchoring of inflation expectations and to mitigate possible second-round effects, thereby preserving the ECB's credibility.

The deliberate lack of a precise definition for "medium-term" – an important component of the price stability objective – reflects the ECB's preference to maintaining needed strategic flexibility.

Monetary policymaking operates under substantial and increasingly large uncertainty, and the appropriate policy response depends on the constellation of shocks driving the inflation deviation – whether shocks are local or common, demand or supply, permanent or transitory, and large or small. Policy transmission also involves significant and variable lags and uncertainties, making overly rigid definitions counterproductive. By emphasizing price stability over the medium-term without specifying exact timeframes, the ECB preserves the flexibility to tailor its response to prevailing conditions and avoid excessive policy-induced volatility in economic activity and inflation. However, this flexibility must not be misused or stretched excessively – any central bank behaviour that is perceived as abandoning the commitment to price stability could undermine the anchoring of inflation expectations.

Regarding the definition of “medium term”, it cannot be fixed in calendar time terms. It depends on the shock that the central bank is facing. An acceptable definition of the "medium-term" horizon would assume it to be short enough to coincide with the minimum time it takes for monetary policy to make a substantial impact on inflation. But it could be longer if the central bank is confronted with transitory supply-side disturbances, which are not likely to affect inflation expectations. In this case, the central bank can be more patient reacting even to inflationary shock in order not to create excessive volatility in growth and unemployment. As you see, the definition is necessarily context-dependent, which supports the case for the current flexible approach.

6. In your view, how should the ECB react to inflation surges stemming from supply shocks? What lessons do you draw from the ECB’s response to the inflation surge following the pandemic and the energy crisis? How will those lessons shape your approach going forward?

It is always important for a central bank to understand what type of shocks is driving inflation and to set an appropriate policy response accordingly.

Some shocks, such as energy shocks (often classified as "supply shocks"), are expected to have relatively short-lived effects on inflation. In such cases, and provided they are not expected to destabilise inflation expectations, it makes sense to "look through" these shocks. Monetary policy affects the economy with long and variable lags, so reacting strongly to temporary shocks is unwarranted – the shock's impact would fade before policy actions could influence inflation and output. Therefore, reacting forcefully to those transitory supply-side shocks would introduce unnecessary volatility in economic activity, harm growth excessively and also increase inflation volatility.

The job of a central banker would be straightforward if we knew what type of shock was hitting the economy or could anticipate future shocks – but these are, by definition, shocks and therefore surprises with often an uncertain transmission potential. So, real-time identification of shock types is often challenging. Moreover, even transitory supply shocks such as energy price shocks may hit the economy in waves. If elevated supply-driven inflation persists long enough, it can affect inflation expectations and trigger second-round effects, requiring a central bank response.

The relatively recent inflationary episode (the post-pandemic inflation surge) is a good example in this regard. Initially, the gradual rise in inflation was considered transitory, but the shocks proved more persistent and broad-based than expected. The supply-side inflation eventually created potential demand problems through the possibility of unleashing feedback loops in the

absence of a sufficiently forceful monetary policy response. Ultimately, forceful policy action was needed to return inflation to target and contain the risks of inflation expectations becoming unanchored on the upside. This experience illustrated the context-specific interpretation of the looking-through approach.

We now recognize that monetary policy operates in a more volatile world where supply shocks will probably be more frequent due to geopolitical fragmentation, climate change, and shifting supply chains. The traditional doctrine of "looking through" supply shocks must therefore be applied more cautiously.

In conclusion, if long-run inflation expectations remain anchored following supply shocks, looking through may remain viable. By contrast, if a supply shock or a series of them occur and trigger second-round effects or affect inflation expectations, a forceful response is warranted irrespective of shock type – particularly given the ECB's primary objective. It goes without saying that, to assess the nature of a shock and understand its propagation mechanism accurately, we must continuously update our forecasting and analytical frameworks.

7. In times of high public debt levels, the ECB could come under pressure to hold down interest rates or continue large bond purchases to help heavily indebted Member States. How do you approach such concerns about ‘fiscal dominance’?

The ECB's monetary policy is guided by its mandate of price stability, and independence from fiscal authorities is a core institutional feature designed to prevent situations where monetary policy becomes dictated by fiscal financing needs. Fiscal policy is the responsibility of Member States. Reacting directly to fiscal sustainability concerns would blur this institutional separation and risk undermining ECB independence. If the ECB were perceived as adjusting policy to accommodate highly indebted governments, this would weaken incentives for sound fiscal policies and reforms, potentially harm inflation expectations, and risk constraining monetary policy to government financing needs – precisely what central bank independence is designed to prevent. ECB communication has repeatedly emphasized that monetary policy cannot substitute for sustainable fiscal policy.

In certain circumstances, the ECB has introduced extraordinary instruments, including large-scale government bond purchases under various programs. Some observers interpreted these as reactions to government financing needs, but they were motivated by the need to preserve price stability and ensure smooth monetary policy transmission during periods of low inflation following the financial crisis or extraordinary shocks like the pandemic. In other words, the ECB responds to threats to its monetary policy goals and transmission, not to fiscal problems – even when those threats originate in sovereign bond markets. For instance, with the introduction of the Transmission Protection Mechanism (TPI) in 2022, the ECB clarified that it will not respond to government bond yield increases justified by macroeconomic fundamentals, but only to unwarranted, disorderly dynamics that threaten monetary policy transmission. TPI implementation will be subject to clearly defined criteria, including Member States' compliance with the EU fiscal framework.

In summary, the ECB's core mandate and institutional independence are specifically designed to guard against fiscal dominance and preserve monetary policy credibility, even during periods of elevated public debt.

8. If faced with a scenario where inflation falls persistently below target while financial stability risks rise, how would you propose navigating this policy trade-off?

The revised monetary policy strategy explicitly recognizes that financial stability is a precondition for price stability and establishes a clear conceptual framework for incorporating financial stability considerations into monetary policy deliberations. Safeguarding financial stability is therefore not a secondary objective but an integral element of achieving durable price stability. A resilient financial system enables an adequate transmission of monetary policy when needed, making financial stability not a constraint on price stability but a prerequisite for effective monetary policy. Possible trade-offs are thus best managed through a complementary use of macroprudential and monetary policy instruments rather than prioritizing one objective at the expense of the other.

In the scenario described, I would follow a "separation with coordination" principle: maintaining a clear sense of the distinct roles of each policy area while remaining strongly aware of how closely the two challenges are interconnected. On the monetary policy side, the starting point would be to remain firmly focused on the ECB's core mandate of delivering price stability over the medium term. Prolonged inflation below target is not benign – it risks weakening inflation expectations and making the target increasingly difficult to achieve. This would argue for pursuing monetary accommodation in a data-dependent and carefully calibrated manner. At the same time, such support should be clearly framed as conditional and proportionate to avoid any perception of open-ended easing that could fuel excessive risk-taking or inflate asset prices.

Meanwhile, macroprudential policy should carry the primary burden of addressing financial vulnerabilities. Rising financial stability risks should not automatically trigger a change in the monetary policy stance and overall financial conditions. Instead, they are better contained through timely implementation of targeted macroprudential and supervisory tools, combined and calibrated depending on the source and intensity of the risks. Early build-up of macroprudential space is particularly valuable. It strengthens banking resilience and preserves the bank-lending channel of the transmission mechanism, thereby preserving monetary policy's room for manoeuvre and allowing it to pursue price stability without being constrained by financial stability risks.

In addition, macroprudential policy is well suited to address nationally specific risk build-ups and to react appropriately at the national level when needed. From my perspective, to ensure these tools work in the desired direction, it is important to empower national authorities to implement them effectively, while the ECB supports this process through dialogue, coordination, and the exchange of best practices among countries. In this regard, it is important to continue the ECB's efforts to complete the macroprudential framework in the euro area, particularly to ensure more effective regulation and supervision of non-bank financial intermediaries.

Maintaining strong macroprudential vigilance is therefore critical. My home country, Croatia, is a relevant example: Croatia has been a pioneer among national central banks in introducing macroprudential measures, actively building up capital buffers and managing risks prudently.

These efforts have strengthened the resilience of its banking sector even in turbulent times. My personal involvement in these initiatives has provided me with practical insights into what makes macroprudential policies effective – from careful calibration and early action to clear communication and close coordination with monetary policy and other stakeholders.

It is also important to keep in mind that, in today's world, clear and consistent communication is essential. This helps explain the rationale behind each set of measures and underscores that policies are not working at cross-purposes. On the contrary, they are deliberately complementary: monetary policy stabilizes prices over the medium term, while macroprudential policy ensures that the financial system remains resilient enough to transmit monetary policy effectively and support sustainable economic growth. This complementarity is further reinforced by the fact that a robust financial sector allows monetary policy to pursue price stability persistently without compromising financial stability.

9. How do you assess the ECB’s communication strategy? Is there scope for further improvement, including the incorporation of more relevant financial and price stability indicators and enhanced scenario analysis in its monetary policy statements?

The ECB’s communication strategy has evolved significantly in recent years and, in my view, now rests on a much clearer and more transparent architecture. Since the strategy review, the monetary policy statement, press conference, Economic Bulletin and the monetary policy accounts together provide a coherent and layered communication framework. This has improved clarity for expert audiences while also making key messages more accessible to the wider public. I particularly value the efforts to simplify the monetary policy statement and to present a more structured narrative on the economic outlook, risks, and policy rationale. Also, the introduction of the simple price stability objective in the 2021-22 strategy review has contributed to improving communication. In the 2025 assessment of the monetary policy strategy, the ECB reconfirmed the importance of clear communication and stressed that it will continue to adapt its approach in response to the evolving communication landscape.

The environment in which monetary policy is conducted has become more uncertain, and this places a premium on clear, timely and consistent communication. Scenario and sensitivity analyses have therefore become increasingly important for explaining how the ECB responds to risks surrounding the baseline outlook. Highlighting these scenarios – especially when uncertainty is elevated – helps market participants and citizens better understand the conditionality of policy decisions and strengthens the ECB’s accountability. I believe that continuing to integrate scenario work into the monetary policy statement, when appropriate, can further support this objective.

There is also scope to continue refining the communication of indicators that matter for the Governing Council’s assessment, including those related to financial conditions, the transmission of monetary policy and the distribution of risks. In my view, giving these indicators a more explicit place in the regular communication package – without overwhelming the audience – would help explain how the Governing Council weighs incoming data and how uncertainty shapes its decisions. This would also reinforce the important link between transparency and credibility.

Finally, communication remains a twoway process. Listening carefully to stakeholders – including citizens, social partners and the European Parliament – can help the ECB adapt its messages and improve understanding of the monetary policy framework. Continued investment in simple, relatable and visual communication tools will be essential for maintaining trust and anchoring expectations. As the media landscape evolves, it is important to continue exploring options to improve communication, with special emphasis on the public at large, where further gains seem possible. If appointed, I would strongly support these efforts and remain committed to engaging openly and constructively in all accountability settings.

10. How do you evaluate the current set of monetary policy instruments at the ECB’s disposal, including non-standard measures introduced in recent years? In your view, how can the use of such instruments be embedded in a governance framework that safeguards accountability to democratic institutions without constraining the ECB’s capacity to act independently?

Next to the ECB policy rates, which is the primary monetary policy instrument to achieve price stability, the ECB has over time developed several other monetary policy instruments. These instruments serve one or both of the following purposes: to steer the monetary policy stance when the policy rates are close to the lower bound and/or to preserve the smooth functioning of monetary policy transmission. These instruments include longer-term refinancing operations, asset purchases, negative interest rates and forward guidance. Each of these instruments was designed to address specific circumstances where adjustments in interest rates in positive territory would have been insufficient to maintain price stability.